Thursday 15 October 2009 15.50 EDT
First published on Thursday 15 October 2009 15.50 EDT

Channel 4 has become the first broadcaster worldwide to make full-length TV shows such as Skins, Hollyoaks and Peep Show available via YouTube, in a deal that highlights the shift in viewing habits from the television to the computer screen.

The deal will see about 50 hours of Channel 4 programming made available on the Google-owned videosharing website soon after airing on TV in a move designed to get it on the front foot as traditional broadcasters scramble to develop revenue-generating online content distribution strategies. For its part, YouTube is seeking to move beyond short clips, often produced by members of the public, to offer full-length TV shows and other higher quality video content.

The three-year deal with YouTube will see the broadcaster provide its content, including 3,000 hours of archive programming of shows such as Brass Eye, Derren Brown, Ramsay's Kitchen Nightmares and Teachers, free. The partners will share income on advertising around Channel 4 content, though details of the revenue split were not revealed.

The agreement is non-exclusive, allowing Channel 4 to continue with its 4oD video on-demand service via its own website, Channel4.com, and free to do distribution deals with other third-party online TV services.

"Our strategy has always been to get our content on as many digital platforms as makes sense," said Jon Gisby, director of Future Media and Technology at Channel 4. "It is still a rapidly evolving market… the only way to stay ahead is to roll up our sleeves and get on with it."

But this view is not shared by all. This week ITV executive chairman Michael Grade, who once labelled Google a "parasite", warned that such deals will mean "Americans will take the lion's share of the internet value in our content in this country, very soon".

Speaking to the Lords' communications committee, Grade admitted that ITV is likely to do a deal with an American video-on-demand aggregation service – such as Google or Hulu, the online TV joint venture backed by News Corporation, NBC Universal and Disney – in order to keep pace with the digital evolution of the industry. But he also cautioned that "none of that money that goes to America will get invested in the UK".

However, Channel 4 is bullish it has made the right choice to form a partnership with YouTube, which accounts for 65% of UK online video viewing. "This [deal with YouTube] is the partnership that got the most traction most quickly; we already had a relationship with them. We are certainly interested in other deals. We remain in conversations with other players in the market," Gisby said.

Online viewing of TV programmes in the UK has rocketed in recent years from just 7.5m hours in 2005 to a predicted 410m this year, according to analysts from Screen Digest. By 2013 more than 750m hours of TV will be watched via a laptop, Screen Digest forecasts. And this does not include the UK's share of the more than 1bn views a day of short clips on YouTube made across the world.

To put the speed of change in context, the BBC only launched the full iPlayer service, which has since become something of a household name and helped drive online TV growth in the UK generally, on Christmas Eve 2007. The need to consider deals with the likes of YouTube and Hulu has become more urgent for major UK broadcasters after Channel 4, ITV and BBC Worldwide's online TV joint venture, Project Kangaroo, was blocked from being launched by competition regulators in February.

Several new players have entered the UK online TV market, or are about to, following the demise of Project Kangaroo. Microsoft moved quickly to launch a pilot version of its MSN Video Player, offering a limited number of shows including Shameless and The Young Ones. Once MSN Video Player is fully up and running it is expected to be complementary to existing services such as the BBC iPlayer, with its seven-day catch-up for current shows, offering older archive programming.

Hulu is in talks with broadcasters and content owners to try to launch a UK version of its successful US platform, which shows programmes including Family Guy, The Tonight Show with Conan O'Brien, and Hell's Kitchen. ITV is understood to be considering taking a stake in Hulu.The other contender lining up to launch a video-on-demand website is Arqiva, the company that owns the UK's TV and radio transmitter network. Arqiva, which bought Project Kangaroo assets including its online video player technology, has yet to announce any deals with broadcasters for programming but is reported to have reached agreements with Channel 4 and the BBC for some content.

There are also smaller players, including BlinkBox, which offers films and shows from partners including BBC Worldwide and Shameless producer All3Media. However, other smaller players are already being squeezed out. Earlier this month Joost UK, the internet TV company launched by Skype and Kazaa founders Janus Friis and Niklas Zennstrom, went into liquidation.

Despite the tough competition Google, which dominates the internet search and video markets globally, is convinced it can once again come out on top in the battle for online TV. "We know that the YouTube community is enthusiastic about full-length programming on the site and we have been working hard to create the right environment for more broadcasters to make their content available," said Patrick Walker, director of partnerships at YouTube. "This partnership demonstrates our commitment to bringing an even greater range of content to YouTube and we look forward to other similar agreements to come."